Republican vice presidential nominee Paul Ryan pressed the U.S. Department of Energy in 2008 to write rules for electric-car loans that could have risked almost as much federal money as was lost when Solyndra LLC went bankrupt.
Ryan, a Wisconsin congressman, who has called the department’s lending programs “corporate welfare,” suggested in a letter co-written with three other lawmakers from the state -- all Democrats -- that money for approved auto loans be released in full up front.
That policy would have later allowed Fisker Automotive Inc., which Ryan on Sept. 4 called an example of President Barack Obama “spending money on favorites,” to draw its entire $529 million loan before it produced any cars. The department, which provided money in installments instead, last year froze all but $193 million of Fisker’s credit after the company fell short of production targets for its first model, the Karma. The letter made no mention of any specific company. Fisker’s loan was approved in April 2010.
The funding request complicates the image that Republican presidential nominee Mitt Romney has tried to project for his running mate as a fiscal watchdog who’s focused on trying to cut the federal budget.
Ryan’s suggestion “makes for reckless decisions, and taxpayers always lose when you circumvent normal process,” said Autumn Hanna, senior program director at Taxpayers for Common Sense, a watchdog group. “It does seem like something that doesn’t go along with how Paul Ryan has aligned himself with federal spending in general and issues at DOE.”
Brendan Buck, a Ryan spokesman, said the letter isn’t in conflict with Ryan’s budgetary philosophy and that what he proposed was a better option than the federal Troubled Asset Relief Program, or TARP, a bailout mechanism created in 2008.
“Nothing in the letter suggests reduced or revised threshold for qualifying funds,” Buck said in a statement. “The flexibility related solely to funding after a company had been approved as a viable recipient. Congressman Ryan believed redirecting these pre-existing funds to aid the American auto industry was a better solution than what the White House ultimately did -- use TARP to pick winners and losers.”
Ryan, 42, chairman of the House Budget Committee, is the architect of Republicans’ fiscal blueprint that would cut emergency disaster aid, Medicare and welfare and end Energy Department loan programs to help reduce U.S. spending by $5.3 trillion below Obama’s proposed budget through 2022.
Ryan, along with Representative Tammy Baldwin and Senators Russ Feingold and Herb Kohl, all Wisconsin Democrats, wrote the Oct. 28, 2008, letter as the Energy Department was establishing rules to implement the Advanced Technology Vehicles Manufacturing loan program, created in a 2007 law signed by Republican President George W. Bush. The lawmakers suggested 11 criteria for then-U.S. Energy Secretary Samuel Bodman to use to determine which companies got loans.
Herbert Allison, a former Treasury Department official who reviewed Energy Department lending after the collapse of solar-panel maker Solyndra, has called the agency’s ability to cut off funding the program’s safety net for taxpayers.
“DOE has robust tools for protecting itself against taking on elective risk,” Allison wrote in a January report. “Since the middle of 2010, all new commitments for loans and guarantees contain strong covenants that give DOE powerful tools to control the amount of additional risk it assumes.”
Solyndra, based in Fremont, California, filed for bankruptcy protection a year ago after receiving a $535 million Energy Department loan guarantee. The company’s failure sparked hearings and congressional criticism.
The vehicle program is one of three Energy Department loan funds that Ryan in his 2013 U.S. budget blueprint described as “corporate welfare.” He has called for eliminating green-energy subsidies, including the $16 billion that remains in the $25 billion vehicles fund.
Besides Fisker, loans have gone to Ford Motor Co. (F), Nissan Motor Co. and Tesla Motors Inc. (TSLA) to develop electric cars, and to closely held Vehicle Production Group LLC to produce wheelchair-accessible vans. Three of the five companies have received all or virtually all of their money, said Damien LaVera, a department spokesman.
Ford said in an Aug. 3 U.S. regulatory filing that it has drawn down all of its $5.9 billion. Tesla has received about $462.6 million of its $465 million loan, or more than 99 percent, it said in an Aug. 2 filing.
Fort Lauderdale, Florida-based VPG has drawn all but $477,500, also more than 99 percent, of its $50 million loan, Joe Vecchiolla, the chief financial officer, said in an e-mail.
Nissan, which received a $1.4 billion loan, doesn’t disclose how much it has used, said Katherine Zachary, a spokeswoman. Nissan, based in Yokohama, Japan, doesn’t trade in the U.S. and isn’t required to file financial information with U.S. regulators.
Fisker’s frozen loan money was tied to its plan, since stalled, to reopen a closed General Motors Co. (GM) plant in Wilmington, Delaware, to produce a second model to be called the Atlantic.
Fisker would have had a U.S.-produced electric car near production had it gotten its full loan up front, Roger Ormisher, a spokesman, said in an interview. The $103,000 Karma, which is assembled in Finland, has been recalled three times since December for battery and other defects.
“We’d have been on track on getting the Atlantic into production and having that car ready for the global market and establishing even more American jobs than we have,” he said. “The taxpayer could have gotten their money back quicker.”
Ryan in a Sept. 4 interview on CBS News criticized the loans to Fisker and Solyndra, both of which were made after Obama took office.
“If you take a look at the president’s policies -- he said he calls them investments -- it’s borrowing money and spending money through Washington, picking winners and losers, spending money on favorites, you know, people like Solyndra or Fisker,” Ryan said.
The Wisconsin lawmakers’ 2008 letter was sent the same month GM announced it would close its assembly plant in Janesville, Wisconsin, Ryan’s hometown.
The lawmakers asked Bodman to give priority to retooling existing auto assembly plants, facilities that are on automakers’ lists to close and those that were oldest, “reducing the carbon footprint associated with new production facilities.” It didn’t mention GM or the Janesville plant.
“These benchmarks will provide ancillary guidance for ATVMLP applicants and staff alike,” Ryan and his colleagues wrote in the letter, which was sent while Bush was president.
Kohl, through spokeswoman Lynn Becker, didn’t respond to a request for comment. Baldwin, through Senate campaign spokeswoman Meghan Roh, didn’t respond either. Feingold, who is no longer in office, didn’t respond to a request through Progressives United, the group he leads that advocates for more disclosure of campaign contributors.
In his Aug. 29 speech accepting the vice presidential nomination, Ryan blamed Obama for not saving the Janesville plant, which employed about 1,200 union workers making sport-utility vehicles. GM announced its decision before Obama was elected and production was almost fully shut down two months later, before the president took office.
The Obama campaign accused the lawmaker of hypocrisy.
“While criticizing the president for a Bush-era clean energy loan program that is part of a portfolio expected to support more than 60,000 jobs, Ryan hypocritically demanded upfront payments to companies under the same program,” Danny Kanner, a spokesman for the president’s re-election campaign, said in a statement. “Congressman Ryan is just not being straight with the American people.”
That Ryan signed a letter advising the Energy Department how to craft the loan program isn’t “a sign that a member violated any pledge to be a fiscal conservative, although, as has already been the case for numerous members of Congress, they may wish at a later date that they had not signed such letters to avoid any potential accusations of hypocrisy,” said Tom Schatz, the president of the Washington-based Citizens Against Government Waste.
“The most valid expression of a members’ stand on issues is his or her voting record; there is no ‘rating’ for signing letters to agencies,” he said, noting that Ryan voted in 2007 against creating the loan program.
Ryan, Feingold, Kohl and Representative Gwen Moore, a Wisconsin Democrat, later sent a letter to Steven Rattner, who headed Obama’s auto task force, asking that an advanced-vehicle loan be used to help a Chrysler Group LLC engine plant in Kenosha, Wisconsin, that was closed during the company’s bankruptcy. Kenosha is in Ryan’s congressional district.
“At a time when unemployment is at an all-time high in the U.S., every effort must be made to promote American jobs and use Americans’ tax dollars prudently,” the group wrote in the May 7, 2009, letter. “We strongly encourage you to work with Chrysler to use this available funding to re-tool the Kenosha engine plant.”
Neither GM nor Chrysler received electric-vehicle loans. Both companies withdrew their applications before the Energy Department made decisions on the requests.
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